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  • investorgold2002 investorgold2002 Jun 22, 2007 7:13 PM Flag

    corus - allowance for loan loss

    something is wrong with management's judgement of allowance for loan loss

    in 2005 allowance for loan loss/NPL = 638%

    in 2006 allowance for loan loss/NPL = 42%

    This tells me management doesnt have a decent methodology of estimating the allowance for loan loss..they are simply being aggressive or it is simply inopportune being on the bad end of economic cycle that has never been experienced by company

    whatever it is, they are aggressive and are probably ignoring the portending asset quality issues...You cannot just base this allowance of loan loss just on company's historical facts on payoffs which is excellent

    i dont know what GAAP says on this, but there has to be a economic factor in it(housing market cycle),...maybe the housing market cycle works in 10 years and worst issues of NPA are not uncovered until 10 years

    you cannot have year over year ratio show such a huge percentage change and not be concerned about management

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